BCSC

Exemption Orders (Discretionary)

THE BANK OF MONTREAL

2001 BCSECCOM 305

IN THE MATTER OF THE SECURITIES ACT
R.S.B.C. 1996, c. 418

AND

IN THE MATTER OF THE BANK OF MONTREAL

Exemption Order Under Sections 48 and 76

[para 1]
WHEREAS the Bank of Montreal (the “Bank”) and BMO Capital Trust (the “Trust”) have applied to the Executive Director under sections 48 and 76 of the Securities Act, R.S.B.C. 1996, c. 418 for an order that certain intended trades in securities of the Bank are exempt from the requirements of sections 34(1)(a) and 61 of the Act;

[para 2]
AND WHEREAS the Bank and the Trust have represented to the Executive Director that:

1. the Bank is a Canadian chartered bank regulated by the Bank Act (Canada), is a reporting issuer under the Act and is not in default of any requirement of the Act or the Securities Rules B.C. Reg. 194/97;

2. the authorized share capital of the Bank consists of an unlimited number of common shares without par value (“Bank Common Shares") and an unlimited number of Class A Preferred Shares and Class B First Preferred Shares, each issuable in series without par value;

3. the Bank Common Shares are listed and posted for trading in Canada on The Toronto Stock Exchange and are also listed and posted for trading on the New York, London and Tokyo stock exchanges;

4. the Trust is a closed-end trust established under the laws of the Province of Ontario pursuant to a declaration of trust dated July 28, 2000, and was formed for the purposes of creating and selling transferable trust units designated as Capital Trust Securities, issuable in series (“BMO BOaTS”) and investing the proceeds in certain specified investments;

5. the Trust became a reporting issuer under the Act as a result of a receipt being issued for a prospectus dated September 28, 2000 qualifying the offering by the Bank and the Trust of a series of BMO BOaTS designated as Series A (“BMO BOaTS - Series A”);

6. the Bank and the Trust now propose to offer to the public by way of prospectus $400,000,000 in an additional series of BMO BOaTS designated as BMO BOaTS - Series B (“BMO BOaTS - Series B”) and may, in the future, elect to offer additional series of BMO BOaTS (the "Additional BMO BoaTS") on terms similar in all material respects to the BMO BOaTS - Series A and BMO BOaTS - Series B;

7. in relation to the offering of BMO BOaTS - Series B, the Trust and the Bank have filed a preliminary long form prospectus dated January 25, 2001 prepared in accordance with the Act and the Rules and will file a final long form prospectus in each of the provinces and territories of Canada;

8. any distribution of Additional BMO BOaTS will be qualified by a prospectus filed in the appropriate jurisdictions (any such final prospectuses, together with the final version of the prospectus in respect of the distribution of BMO BOaTS - Series B, are collectively referred to herein as the “Prospectus”);

9. both the Bank and the Trust will sign a certificate in the Prospectus;

10. the terms of the BMO BOaTS - Series B provide for, and the terms of each series of Additional BMO BOaTS will provide for, among other things, the following:

(i) the automatic exchange of such BMO BOaTS into non-cumulative redeemable Preferred Shares of the Bank (the "Bank Preferred Shares") upon the occurrence of certain defined events (the "Automatic Exchange”);

(ii) the redemption by the Trust of such BMO BOaTS for Bank Preferred Shares upon the occurrence of certain defined events (the "Trust Share Redemption"); and

(iii) the exchange of such BMO BOaTS at the option of the holder into Bank Preferred Shares on and after certain specified future dates, which dates will be not less than one year from the date of issuance of BMO BOaTS of that series (the "Holder Exchange Right");

and these rights of exchange and redemption applicable to a series of BMO BOaTS are, or will be, set out in the Prospectus and preliminary version of the Prospectus relating to the distribution of such series of BMO BOaTS;

11. no commission or other remuneration will be paid or given to others in respect of the exercise of the Automatic Exchange, the Trust Share Redemption or the Holder Exchange Right, except for administrative or professional services or for services performed by a registered dealer;

12. the terms of the Bank Preferred Shares will provide, among other things, that such shares are convertible at the option of the holder into Bank Common Shares in certain circumstances;

13. the Bank, the Trust and The Trust Company of the Bank of Montreal will enter into a Bank Share Exchange Trust Agreement providing for, among other things, the grant of the Automatic Exchange and the Holder Exchange Right in respect of the BMO BOaTS of each series as well asthe grant by the Bank to the Trust of a right to subscribe for Bank Preferred Shares in order to give effect to the Trust Share Redemption;

14. the distribution of the Bank Preferred Shares under the Holder Exchange Right, which is a security of the Bank, will be made in reliance on the registration and prospectus exemptions contained in sections 45(2)(12)(iii) and 74(2)(11)(iii) of the Act; and

15. there are no available exemptions from the requirements of sections 34(1)(a) and 61 of the Act for the distribution of Bank Preferred Shares to a holder in British Columbia under the Automatic Exchange or the Trust Share Redemption;

[para 3]
AND WHEREAS the Executive Director considers that to do so would not be prejudicial to the public interest;

[para 4]
IT IS ORDERED:

1. under sections 48 and 76 of the Act that the intended trades in Bank Preferred Shares under the Automatic Exchange and the Trust Share Redemption are exempt from the requirements of sections 34(1)(a) and 61 of the Act; and

2. under section 76 of the Act, that any trade in Bank Preferred Shares acquired under this order is deemed to be a distribution unless:

(a) the Bank is a reporting issuer and has been a reporting issuer for the 12 months immediately preceding the trade;

(b) if the seller is an insider of the Bank, other than a director or senior officer of the Bank, the seller has filed all records required to be filed under sections 87 and 90 of the Act;

(c) if the seller is a director or senior officer of the Bank, the seller has filed all records required to be filed under sections 87 and 90 of the Act and the Bank has filed all records required to be filed under Part 12 of the Act and of the Rules;

(d) the trade is not a distribution from the holdings of a control person;

(e) no unusual effort is made to prepare the market or create a demand for the securities; and

(f) no extraordinary commission or other consideration is paid in respect of the trade.

[para 5]
DATED March 9, 2001.

Derek E. Patterson
Manager